Think I found a deal but I don't know where to start

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Think I found a deal but I don't know where to start

Alissa Noel
Real Estate Agent · Tucson, AZ · Member since 2022 · 1 post · 0 votes

Last year I got my real estate license and started listening to BiggerPockets pretty obsessively. A friend asked me what my dream job was and with very little thought or hesitation I said "Real Estate Investor". 

The thing is, I literally have almost no money. I wouldn't qualify for a loan either.

I recently came across a listing and I have been following it on realtor.com for almost a month. It's a fixer-upper and says that it won't qualify for an FHA so I think getting any kind of loan may be difficult anyways.

The home is in a huge vacation town and the area is PERFECT for a short-term rental. Unfortunately, the house is in another state so I haven't been able to see it in person but it appears that it has a basement that could be converted into a studio apt. This would be perfect as it could either be used as 2 short-term rentals or the basement could be a long-term tenant and the house could be a short-term rental. I even have a friend who could help manage the property and live in the downstairs apt if it made sense.

I cannot stop thinking about this house. It has been on the market for 44 days and has had at least 2 price drops. If this home was in tip-top condition it would be selling for well over $500K. It's currently listed at $410k but if David Greene has taught me anything it's that some of the best deals come from waiting it out on houses that are sitting.

So I realize raising capital is a thing. I'm not entirely sure where to start (if anyone on here is interested and wants more info please let me know!) 

Let's say I was just going to go for it, I would have to raise the capital before I even made an offer on the house, correct? So what happens if the house is no longer available after the money is raised? Do I just give the money back? It seems crazy to me to ask someone for hundreds of thousands of dollars only to turn around and say just kidding. Is there a way to kind of secure a deal before raising capital or should I just start offering up this investment opportunity to whoever will listen?

I know this is kind of a chaotic post but if anyone has any advice or wants to know more about the deal please reach out! THANK YOU!

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  • Kyle S.
    Member since 2022 · 64 posts · 35 votes
    3y

    Welcome to the BP community! My two cents this might be a bit heavy for your first start in investing. That is just my opinion though. I would suggest starting with a house hack, once you have worked for 2 years and saved up a bit you should be able to do that. That will get you started and learning more about investing. 

    But most investors if they were interested in this would use hard money so get a loan to get it done. But you never know if you find an investor that loves the deal they might buy it and you can get a fee for bringing them the deal but not sure how likely that is with it listed on the MLS.

    Another thing you can do is go to airdna.co and see what it says it could get as a short-term rental. Bare in mind this is not super accurate but would give you a ballpark. 

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Alissa Noel:

    Welcome to the BiggerPockets forums!

    When you partner, it's common that you provide some value to the deal. If the property is in another state, you can't really do much to broker the deal, renovate, or even manage it. So what would your part be in this transaction?

    Have you crunched the numbers to see how it would perform? You should be able to demonstrate what kind of return an investor can expect. That will motivate them to partner with you on the deal. If your pitch is, "It's a really cute house that I think would make a great AirBnB" then you may have a hard time getting anyone to jump in. If you say, "If we put 25% down, spend $30,000 on renovations and $20,000 on furnishings, we can start renting it this Spring. I'm conservatively projecting rent rates at $XXX per night, 220 nights of occupancy per year, and total revenue of $YYYYY. That will give us a 22% return."

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